Sir Ronald Cohen is somewhat overhyped in his role as the godfather of SIBs (but he has clear qualifications in the overall social investment world), useful story but today’s lead news is the launch of a South American SIB fund – a place where with ongoing socialist experiments like Venezuela demonstrating the abject limits to government, it’s time to try the DIB/SIB alternative in a fascinating continent with so much potential.

Following the lead of the U.K. , the U.S., and other places, the Inter-American Development Bank (IADB), which provides development financing for Latin America and the Caribbean, recently announced that its Multilateral Investment Fund (MIF) is testing out the new approach with a $5.3 million program.

The IADB provides loans, grants, and technical assistance to the region, while The MIF works with innovative, somewhat riskier projects.

Social Impact Bonds, which I’ve written about before, are a new way for socially minded private investors to work with governments and nongovernmental organizations or other service providers addressing deeply rooted problems among low-income or vulnerable populations. The particular issue that’s targeted depends on the society and culture involved. A recent one in Massachusetts, for example, aims at curbing recidivism among young inmates. Whatever the problem, the outcomes must be measurable.

They’re also known as Pay for Success, because, if the project reaches its goal as determined by a third-party evaluator, the government pays back donors with a small profit. If those objectives aren’t reached, there’s no return. So governments and taxpayers only pay up if a program is successful in addressing a particular problem.

Social impact bonds are a new financial export from the UK. They’ve become a popular financial tool in the US with recent investments escalating to over $10 million for new projects in recidivism, healthcare, and education. Backed by foundations such as Rockefeller and Bloomberg, and with buy-in from corporates such as Bank of America, they’ve created a stir, offering a different way to finance government-backed social programs.

Sir Ronald Cohen is the architect of these so-called “bonds,” a deceiving name, given that they’re not really bonds. He spoke in the opening plenary session at the 2014 Skoll World Forum about revealing the “invisible heart of markets” through this new financial tool.

SIBs have four players: an investor (or group of investors), an intermediary (such as Social Finance US/ UK) who set up the SIB, a social service provider (the local NGO who will be utilizing the funds), and the government. The first SIB was piloted in Peterborough, UK three years ago. A recidivism project, designed to lower the rate of prisoners who are released and become repeat offenders, it aspires to take the financial burden off the Ministry of Justice by using capital from philanthropic and impact investors. Only if the project is successful, that is if recidivism rates fall, will the government be required to pay back the investors.